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Welcome to Wiley’s update on recent developments and next steps in consumer protection in the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). In this newsletter, we analyze recent regulatory announcements, recap key enforcement actions, and preview upcoming deadlines and events. We also include links to our articles, blogs and webinars with more analysis in these areas. We understand that staying on top of the rapidly changing regulatory landscape is more important than ever for companies looking to deliver new and breakthrough technologies. Please contact us if there are other topics you would like us to cover or for any additional information.
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The FTC will vote on government fraud and ANPRM identity theft. At December 9, FTC President Lina Khan announced that the FTC will vote on an advance notice of regulatory proposal (ANPRM) at the agency’s meeting Public meeting on December 16. According to the FTC press release, the ANPRM is intended to combat “rampant government and corporate identity theft fraud.” The FTC says such scams “are a primary source of consumer complaints and the largest source of total consumer reported financial loss – and have worsened during the pandemic.”
CFPB publishes 2021 violation surveillance highlights report. At December 8, the CFPB published a Supervisory highlights report summarizing the legal violations identified by the agency during the first half of 2021, including previous surveillance findings that led to enforcement actions during the first half of 2021. Among other violations, the report focused on (1) findings that mortgage services blamed late borrowers for defaulting fees and charges, despite the Coronavirus Aid, Relief and Economic Security Act ban; (2) alleged violations of the Equal Credit Opportunity Act by mortgage lenders against African Americans and female borrowers; and (3) payday lenders allegedly charging consumers’ bank accounts without authorization.
FTC data shows a recent increase in gift card scams. At December 8, the FTC published The data showing that consumers reported losing $ 148 million in the first nine months of 2021 to scams in which gift cards were used as a form of payment. Specifically, 40,000 consumers reported falling victim to gift card scams during this period. Consumers said they lost $ 116 million over the whole of 2020, according to FTC data. The FTC notes that fraud most often occurs when scammers trick consumers into giving them the number on the back of the gift card.
CFPB publishes final rule to ease transition from LIBOR. At December 7, the CFPB issued a Final rule to facilitate the transition of the London Inter-bank Offered Rate (LIBOR) index. The LIBOR index, which will expire in June 2023, is a standard financial index used by the US capital markets, and many financial instruments, including adjustable rate mortgages, credit cards, student loans, loans reverse mortgages and home equity lines of credit are linked. to that. The final rule, which comes into effect on April 1, 2022, requires creditors to choose an index comparable to LIBOR when changing the index of a floating rate loan.
CFPB Director Chopra delivers remarks at the December NAAG meeting. At December 7, the director of the CFPB, Rohit Chopra, delivered Remarks at the December meeting of the National Association of Attorneys General (NAAG). Director Chopra focused on developing regulations to avoid the pre-emption of “stronger state laws that protect the public” in the area of consumer protection. He also noted that he had asked the CFPB to explore ways the agency could expand the remedies available to state attorneys general under the Consumer Financial Protection Act. Finally, Director Chopra stressed the desire to coordinate with state attorneys general to prevent repeat offenders from violating agency or court orders made at the federal and state levels.
CFPB publishes a study on bank overdraft fees. At 1st December, the CFPB published research (available here and here) finding that bank income from overdraft and insufficient funds (NSF) fees reached $ 15.47 billion in 2019. CFPB research concludes that overdraft and NSF fees account for two-thirds of bank income, which vary by institution based on bank call reports. However, the research also found that overdraft and NSF fee income fell 26.2% in 2020. The CFPB said that as a result of the research, it will “strengthen its oversight and oversight control. application of banks which depend heavily on overdraft fees. . “
CFPB and Federal Reserve announce thresholds for exempting consumer credit and leasing transactions from M and Z regulations. At 1st December, the CFPB and the Federal Reserve Board (Federal Reserve) announced that Regulation Z and M will apply to consumer credit and leasing transactions of $ 61,000 or less in 2022. Private education loans and loans secured by real estate (such as mortgages) remain subject to Regulation Z regardless of or the amount of the loan. Regulation Z is the Enforcement Regulation of the Loan Truth Act, which requires lenders to provide certain information to consumers regarding the costs of borrowing. Regulation M implements the Consumer Leasing Act, which requires landlords to make certain disclosures to tenants before entering into rental contracts.
Recent Congressional Hearings
Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States. At December 8, the United States House of Representatives Committee on Financial Services held a hearing titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.” List of witnesses, opening statements and a recording of the hearing are available here.
Deadlines and upcoming events for comments
The CFPB is seeking comments on proposed changes to the ECOA rules under the Dodd-Frank Act. comments are due January 6, 2022 on a proposed rule to amend rule B of the Equal Credit Opportunity Act (ECOA) made pursuant to section 1071 of the Dodd-Frank law on Wall Street reform and protection of consumers (Dodd-Frank law). Concretely, the agency proposes to oblige the financial institutions covered by article 1071 to collect and declare to the CFPB certain data on the credit applications of small businesses. The rule proposed by the CFPB also addresses privacy interests; protect the demographics of underwriters and other individuals; record keeping requirements; and implementing provisions. The agency is also seeking comments on effective and compliance dates.
The FTC is seeking comments on a proposal to further amend the safeguard rule to strengthen information security protection for financial institutions. Comments are due February 7, 2022 on a proposal in a additional notice of proposed regulations add reporting of certain security incidents to the FTC by covered companies within 30 days of discovery. Specifically, the proposal would require financial institutions to report security-related events to the FTC when it has been determined that consumer information has been misused, or is reasonably likely to be misused. usefully, in an event affecting at least 1000 consumers.
The FTC’s revisions to the safeguard rule are effective January 10, 2022. FTC revisions to the Backup rule were published in the Federal Register on December 9. The Safeguards Rule requires financial institutions subject to the Gramm-Leach-Bliley Act (GLBA) to implement information security programs to protect consumers’ financial information. Covered companies include many online financial technology (fintech) companies, mortgage lenders, and companies otherwise involved in credit transactions, among others. Accordingly, by January 10, 2022 and as we discussed in more detail here, the revised rule will require financial institutions, among others, to implement periodic risk assessments and modify their information security programs based in part on those risk assessments. More detailed requirements will come into effect on December 9, 2022.
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Disclaimer: The information is current as of December 13, 2021. This document is for informational purposes only and does not purport to be a comprehensive review of all procedures and deadlines. Deadlines and dates are subject to change. Please contact us with any questions